HF 

1756 
•S8 



. n|p 



A V 



Address of 
WILLIAM G. SUMNER 

Professor of Political and Social Science in Yale University 

At Dinner of the Committee on Tariff Reform 

of the Reform Club in the 

City of New York. 



June 2nd, 1906. 



Published by the 

REFORM CLUB 

COMMITTEE ON TARIFF REFORM 

42 Broadway, New York, N. Y. 



1906. No. 4, AUGUST 15th, 1906. 






Gift 

-uthor 

23 '06 



PROFESSOR SUMNER'S ADDRESS. 

Mr. Chaieman and Gentlemen — I think it must be now nearly 
twenty years since I have made a free trade speech or been able to 
take share in a free trade dinner. 

When I was invited here this evening I thought I would try to 
come for the pleasure of hearing the gentlemen, especially the mem- 
bers of Congress, who were announced to speak here. I have been 
so out of health that it has been impossible for me to sit up evenings 
or to attempt public speaking in the evenings, but things are going 
a little better and I will make an attempt to say a little this evening 
— not very much, as the hour is now late. 

Thirty-five or forty years ago I became a free trader for two great 
reasons, as far as I can now remember. 

One was because, as a student of political economy, my whole 
mind revolted against the notion of magic that is involved in the 
notion of a protective tariff. That is, there are facts that are ac- 
counted for by assertions that are either plainly untrue or are entirely 
irrational. The other reason was because it seemed to me that the 
protective tariff system nourished erroneous ideas of success in busi- 
ness and produced immoral results in the minds and hopes of the 
people. 

I cannot say that I have got any more light on the matter within 
the last twenty years, but it looks to me still as if the great objections 
to protectionism were these two. No man who enjoys the benefit of 
a protective tariff, as he believes, can ever tell whether he gets back 
anything for the taxes which he pays or not. He never has any 
analysis of the operation and never knows whether he really recovers 
what he pays in from the action of the tariff or not. 

I say now the taxes which he pays, because let us not make any 
mistake about this. The matter we are talking about is one entirely 
of Americans and between Americans. If the protective tariff oper- 
ates so as to perform what is attributed to it, it prevents things from 
being imported into this country. That may be a disadvantage to 
the foreigner, it. may disappoint him in his hopes, but we may leave 
him out of account. Then the increase of the cost of these commodi- 
ties for the American consumer at home is the source from which 
the American protected manufacturer must obtain his benefit, if he 
ever obtains any. Therefore, he has to pay also taxes to the other 
protected industries on account of the operation of the system. 
Therefore he is both paying and receiving, but whether he gets back 
the part that he hoped to receive or not is an operation which he 
never can sift and never can know. 

I should suppose myself that possibly the Pennsylvanian on his 
coal and iron might stand a good chance of winning something. The 



operation is direct and simple in that case and coal and iron are to- 
day the very first conditions of industry. They must be obtained 
as raw material, because they enter into everything, and it is possible 
that under those circumstances the game might be sufficiently direct 
so that its effect could be felt and perceived. But the Connecticut 
manufacturer has to pay taxes on coal and iron and copper and the 
other metals and he has to pay also the taxes on wool and the other 
raw materials, and then comes the question whether he ever gets it 
back again or not. He never knows ; he cannot know ; he cannot feel 
it and he cannot possibly know whether the operation of the system 
is to bring him back a return for his outlay or not. 

We hear a great deal about a rightly adjusted tariff. It is a con- 
stant ideal that is presented whenever the tariff subject comes up 
again for discussion in Congress that it ought to be rightly adjusted, 
and when it is, it is going to perform its beneficial operation. 

How can a tariff ever be rightly adjusted unless the industry will 
stand still? The taxes stand still for years without change. The 
industries never stand still. There are new inventions in machinery, 
there are new raw materials brought into use, there are new processes 
developed, and all that changes the character of the industry. These 
inventions and improvements and processes are all ignored by the 
protective system. It contains no allowance for them at all. But 
our people are full of enterprise, they are fond of improvements, 
they like novelties, and they adopt changes. The conseqeunce is that 
the industry changes, and then again the decisions that are made 
by somebody or other as to the doubtful questions in the interpreta- 
tion of the law are also constantly changing, and then by and by we 
find a lot of people who want the tariff changed. They say it needs 
to be adapted to the time, it is out of date, it has fallen behind, it does 
not fit the requirements of the moment, and they would like to have 
a tariff revision; but they are told then, that they ought to keep still 
and not make a disturbance which will bring up a discussion of the 
entire tariff system, and that they ought to allow it to go on for the 
sake of the a system." 

What is the system then? The system means that the import 
duties that we have in this country have raised the prices of all 
commodities in our market, I may say, thirty or forty per cent, on a 
very low calculation. Is not that a very extraordinary thing when 
you stand off and you try to realize it for a minute — that we have 
raised the prices in the United States thirty or forty per cent. — per- 
haps more nearly fifty per cent. — above the level of the prices for the 
same commodities in the other civilized countries of our grade, and 
we believe that we have done a grand and noble thing by raising 
these prices, putting the whole level of life in this country on an 
artificial plane that much above the level of the world's market? In 
fact, if you should listen to a protectionist he would make you believe 
that this continent would not be habitable if it was not for the pro- 
tective tariff that is here working this operation all the time on the 
American market. 

I am of the opinion — I am not very confident about it, but it 



looks to me as if it were true that a protective tariff wears out in a 
little while — I mean, so far as its expected beneficial effect is con- 
cerned. 

Its effects are distributed, they are taken up and they are allowed 
for all around the market until the expected benefit to the protected 
people is lost and there remains nothing but the dead weight of the 
system itself as an interference with the industries. There is then 
a call for a new tariff in order to get another impulse or another fillip, 
as I have heard it called, to give things a new start, to start them on 
again. 

That has been the history of our tariff now for one hundred years, 
that it has been restarted, reinvigorated from time to time in order 
to give a new impulse. Then in the very nature of the case, there- 
fore, it seems to me that a new impulse is constantly required. 

As I said at the outset, the tariff system seems to me to teach us 
to believe that a man needs a " pull " of some kind or other to make 
any industry a success. It is an idea that there must always be a 
provision of easy profit in connection with the industry that shall 
cause no labor or no expenditure of capital to get it. That is the pure 
doctrine of graft. The tariff teaches us to look for a fee or a gratuity 
or a rake-off which will be a pure and net profit. 

People are told that tariff taxes are a rightful gift to the bene- 
ficiary. Those who do not get that gain seek another one of the same 
kind somewhere, and when they do that they have recourse to graft. 

It is a shameful fact that this notion of graft, and this- word, 
should have come to us, as it has within the last four or five years, 
and should have extended so far and become so familiar to us in con- 
nection with a great many of the operations of business. It is cus- 
tomary, as we have known for a long time, in some nations, for in- 
stance in Enssia, China and Turkey, and with us it has seemed to 
spread and to win acceptance and currency in a most astonishing 
manner. 

I cannot believe but what the tariff system has educated us in 
this direction and prepared Us to tolerate and accept the development 
of this idea. It also seems to me that now, after one hundred years 
of this system, the tariff is no longer properly an economic question. 
It is a practical political question. The politics and the business are 
interwoven in it inextricably. There is no economic discussion pos- 
sible of the propositions that are made, economic in form, in connec- 
tion with the tariff system. There is only a'war of partial views and 
of superficial inferences. 

Our American protectionism has grown out of the peculiar cir- 
cumstances of this country. It is an old idea that has come down 
to us from Europe, and indeed, from the Middle Ages in Europe, 
and here it found a chance for a new and verv remarkable develop- 
ment. There were new conditions here and the chances here were 
so big and grand that, as a matter of fact, the protective system has 
never done more than exact a certain tribute from us on these 
chances. It has never really touched us in an acute and sensible 
way, and in spite of it we have enjoyed marvelous prosperity which 



6 

is due really to the circumstances of advantage and favor which we 
have enjoyed here. 

In the year 1892 we got an issue on this matter and went to the 
electorate with it with the result that we all know. But the mandate 
of the people was neglected and disobeyed by the government and 
the purpose that the people showed at that time was defied. 

We have also had opportunity to notice the great power of the 
protected interests in Congress. The fact is that we are being gov- 
erned at the present time by a combination of these protected inter- 
ests which have got control of the machinery of government, and 
have control of the personnel of the government to such an extent 
that it is almost impossible, practically, to make any breach in this 
system at all. That is because the political combinations have been 
so thoroughly wrought out and so ingeniously developed that they 
look at present as if they were impregnable. 

I look around to see if I can find some encouragement. I thought 
that it was something of an encouragement when Mr. Dalzell made 
this speech in Congress that Mr. Williams has referred to, in which 
he poured such scorn on the idea of " incidental protection." I have 
never said anything so severe about any protectionist idea as that 
which he said about incidental protection. But suppose that the 
people of 1850, the middle of the nineteenth century, could come to 
life again, the old protectionists of that time. What would they 
think to hear a man speak with scorn of incidental protection? It 
was what they believed in; it was the whole business to them. When 
an old protectionist like Mr. Dalzell can turn around and pour scorn 
upon incidental protection I feel as if we never could tell what they 
might throw overboard next time in some paroxysm of some kind 
or other, fear or hope or something, and we might get a chance that 
we have not been able to get in the past. 

Then, as has well been said by other gentlemen to-night, there has 
been within the last year or two a very great revolt in the public 
mind against graft and political and business corruption. How far 
will this go? We do not know, but it is, at any rate, an opening in 
the public mind that is full of chances. It may go very far, it may 
have very great effects, it is certainly something to be noticed and 
taken advantage of. 

Then, again, there are new conflicts of interests arising. We have 
bocome very great people in the world's commerce, with a billion 
dollars' worth of exports and imports in a year, and we are so inter- 
woven with the whole world that it will not be possible for us to go 
on with our our old policy of discouraging commerce and rejecting 
it, and trying to stop it, and paying no attention at all to the remon- 
strances of our neighbors. In future we shall be obliged to pay some 
attention to these remonstrances. They are just, they are reasonable, 
and they will command our attention, and then we shall have to make 
concessions to them. In other words, we cannot any longer afford 
to reject and neglect these remonstrances. 

It may be, therefore, that in the time that is now before us we 
shall have better chances for a practical war upon this system than 



we have had hitherto. As long, however, as I can remember, and as 
long as I have had any share in it, we have got along without any 
encouragement in it at all. We have done what we could without 
them. We got so we did not expect it. We knew that we should be 
neglected and treated as persons whose opinions in these matters 
were not of any importance or worthy of any attention, and so we 
went on and kept up our arguments, as we considered them, to the 
best of our ability and without very much results. 

Now, it may be that we are on the eve of a different time, when 
the circumstances will be more favorable, more hopeful, more full 
of opportunities, and I certainly, for my part, most profoundly hope 
that that is so. 

I have noticed with some discouragement the efforts that Mr. 
Williams has made on the floor of Congress to get some modifications 
made of the tariff or some argument even opened there that might 
give the matter activity and life in the legislative domain. They did 
not seem any more encouraging than what we used to see in the old 
times. But it is certainly in the nature of things that the difficulties 
and absurdities of this system must come out in practice more and 
more distinctly as we go on, and the need for reform will therefore 
force itself in the shape of a play of interests that will bring new and 
counteracting forces into operation to which we may look for help 
in the overthrow of the system. 



